Madam Speaker, one of the things I like to do when I address an issue is always lay out the philosophical principle grounds as to why I am addressing it and where my conclusions come from. One thing I have noted in this House, over the years, is members do a fairly excellent job of going through the details. However, when we are in this House, we are not just speaking to other members, explaining details, we are laying out our basic understanding to our constituents and to the broader Canadian public as to why we are voting for or against something. I always consider it very wise to lay out the basic principle as to why I will be voting on a piece of legislation in one particular way or another.
However, with respect to this particular legislation, the CPP tax hike, as we the Conservatives are noting Bill C-26, the reason I am particularly voting against it is that the government is taking away freedom and choice from Canadians. Let us be fairly clear with what the government is doing by raising the CPP premiums: it is taking away people's choice. This is not some money that is coming from somewhere else into people's accounts. It is not money falling from heaven like manna. It is people being forced to take the money, which they may very well need now, and to delay it for some future benefit some day, as the data and research shows for Canadians of my age and younger, at a very poor rate of return.
Let us go through the basic objections as to why the Liberal government's CPP hike would be bad for Canadians, would give them less freedom, and, in the final analysis, would not be good for our economy or people's individual lives.
The first point is that increases to the Canadian pension plan, hikes to the premiums, have not over the long term increased savings. The government is naturally going to argue, “Of course, this is forcing people to put money into the future that they will get back from the CPP when they retire”, but the empirical data and research that has been done, in the past, shows that whenever we have hiked the rates on premiums the number one place where Canadians tend to take the money from, when the government takes it from them forcefully, is their savings. It is almost a 1:1 ratio.
That means every time there is a hike, the government requires more in contributions, be it directly from people's paycheques or indirectly, although it still comes from people, ultimately, under the guise of taking it from their employers' contribution share. What do Canadians do? They put less money into mutual funds; they put less money into RRSPs; and now, with the introduction of the tax-free savings account, we will see less investment and less savings there.
What is happening is not that Canadians are getting a larger sum of money for their retirement, but that the government is taking away options from Canadians, taking away flexibility, and putting money into a pension plan for them, which may or may not be in their best interest.
Canadians are at different points in their lives, with different interests.
I am married. I have a 20-month-old daughter. All members of the caucus who know me know I am very proud of her. My wife and I, rather than wanting to put more money toward our pension plans, are looking to start a registered educational savings plan for our daughter. We hope some day she will grow up, graduate from high school, and go forward for further education. That is the priority for us. However, when the government begins to engage in things like the CPP hike, it takes away people's freedom to make those choices and, instead, decides for them, “This is where your savings need to go”.
There is an issue right now with affordable housing across the country, and in Vancouver and Toronto in particular. One of the greatest places where people save money is in their real estate. It is very difficult for young people now to get a foot on the ladder. The argument is, “Well, these aren't great sums of money, but a dollar is a dollar, and every little bit makes it more difficult”. To top it off, with the government's changes to mortgages, it continues to make it more difficult for young people who want to get on the housing ladder. The point is that by taking away people's freedoms, the government does not increase and encourage more savings for retirement, it just changes the vehicle for how it is done.
The second point is this. There might actually be some benefit to Canadians if the rate of return was that much greater. There was an interesting paper done by the Fraser Institute that analyzed, depending upon what year people were born, the actual rate of return, in real value, for the average Canadian. For people born after 1972, it is barely over 2%.
I am 42 years old and was born in 1974. For me, the rate of return on my retirement plan is absolutely lousy. For people from my grandpa's generation born before 1920, it was an absolutely fabulous rate of return. It was incredible. He lived to be 92 years old, he paid for approximately 10 years, and it was amazing.
However, this is the issue. For young Canadians going forward, an increase to the Canada pension plan is not great. It is a poor return on investment. If people put money in, say, a low-cost indexed fund or something like that, historically, it is shown to have greater returns that one can control. Let us say that, unfortunately, someone passes away early. Their heirs would receive extra benefits. The government's plan would instead provide weaker returns for younger Canadians. It is not helping people. It is deciding for Canadians when they need their savings, now or later, and at an inferior rate of return. That is the second point that the government needs to note.
What problem is the government addressing? Again, this needs to be dealt with. When we discuss retirement, we talk about replacement income. This really is not the issue when it comes to retirement income. The question is more one of whether Canadians are living in poverty at certain times in their lives. I am sure that when most hockey players quit playing in the NHL, they do not get retirement replacement income of 70% of their previous earnings. That is not the point. The question is whether their incomes will drop to a point where they will live in poverty. They have a choice. They have their bulk earning years and they can move things around. That is an extreme example.
I found this statistic earlier today on the Fraser Institute's website, which is that only 3.7% of Canadian seniors live in poverty, whereas it is more than 10% for working-age Canadians 18 to 64. For young people trying to put money into their educations, which for many people is the best investment by far, it is going to be difficult. Again, the government is taking away people's flexibility and making decisions for them, so that, in the end, they will not have the best return on their investments for their lives.
Instead of concentrating on replacement income, retirement policies, from a federal government perspective, should zero in on people who have low incomes. Those are almost always people who have not contributed to the Canada pension plan, because they have not worked over the years or were self-employed and not able to save money.
As my time has just about expired, I will mention another point that can be discussed in questions and comments, which is the cost of CPP versus other low-cost options available for savings. What it comes down to is that we will lose our freedom. We lose our freedom when we allow the government make decisions for us.
Let me reiterate that this bill would not solve the problem for low-income seniors, which is the real problem in retirement. It would provide a poor rate of return for people who view it as an investment, and it would displace savings from one portion of life to another portion of life by taking away people's freedoms. I will be voting against this legislation because it is bad policy. It is bad policy for Canadians now and in the future.
